Andrew Fowler, UK country manager at ecommerce personalisation and merchandising specialist Apptus, examines the spectre of automated merchandising and tries to reassure us that there is nothing to worry about!
The double-edged sword
Since the industrial revolution, automation in the workplace has met with extreme reactions. As a business owner you would rub your hands in glee as you realised you could punch out more widgets, more quickly while employing fewer people.
However, if fate had dealt you a different hand, you’d be quaking in your boots as you realised your widget making skills were no longer required and unemployment beckoned.
A dystopian future?
During October last year Gartner published a number of predictions for the following twenty-four months that, on the face of it, signalled a distinctly dystopian future. These included, inter alia, the predictions that by 2018:
• 20 percent of business content will be authored by machines;
• Over 3 million workers globally will be supervised by a “robo-boss”;
• 2 million employees will be required to wear health and fitness tracking devices as a condition of employment.
So if you are in middle management, or you’re a copywriter – is the writing on the wall?
Not really. The reality is the technologies that feed these predictions are really just taking the grunt work out the job and adding levels of safety:
• Automated composition machines will produce analytical information in written natural language, which is potentially useful for shareholder reports and budgets. This frees up writers to focus on the creative stuff. Fun.
• The “robo-boss” will be a glorified clocking in system that deals with ‘bulk’ management tasks requiring little in the way of personal intervention.
• The health trackers will tell us that an airline pilot is about to have a stroke, or a military recruit is being pushed too far, they will save lives.
Marketing has had its fair share of automated processes, the most recently talked about being ‘programmatic’ advertising, marketing and media buying which allows marketers to target demographics such as age, gender, social standing, to geographic location down to particular town. Software is used to automate buying, placement, and optimisation of the inventory via a bidding system, and all in real time.
Retail, though, has seen remarkably few significant step changes when it comes to automation. And understandably; buy products, display them attractively, take the money, count it, bank it and repeat. OK, an oversimplification I grant you, but you get the point.
There are some though:
• Cash registers and subsequent EPOS systems have removed the need for a counting house and in store bookkeepers.
• Automated warehouses, such as Benetton’s, allowed robots to pick and pack.
• Self-serve tills have reduced the need to have checkout staff.
• The internet – enough said!
The eCommerce merchandising challenge
Merchandising is the selection, placement and presentation of products that makes best use of the space available – you will consider profitability, inventory, brand promotions and current marketing campaigns.
When you rely solely on bricks and mortar, merchandising is constrained by the amount of space available to display product. Visual merchandisers work their magic to make displays attractive and commercial, but depending on the depth of the product range, something has to take a back seat and languish in the stock room.
In order to display more products, you can produce a catalogue that dramatically expands the number of products on offer.
But the position with an eCommerce site is interestingly paradoxical: On the one hand the ability to display an endless number of products is only constrained by the capacity of your database – millions. On the other hand a shopper can only view one screen at a time. You cannot flick through a website in the same way you can flick through a catalogue, so what comes up on screen needs to be highly relevant.
At worst it is costing retailers a small fortune in missed opportunities. Take the example of down selling. A merchandiser will typically display similar items next to a product on a product page; you search for the latest iPhone, arrive at the product page, are just about to add to basket and you see a cheaper version helpfully displayed in the side bar, so you check it out, buy it, and the retailer is down £100 on the original opportunity.
With endless possibilities, the online merchandiser can never really optimise, they can only overexpose or underexpose, never really knowing when to start pushing some products and when to pull back. Not because they are not skilled, but because there are just too many permutations.
Merchandising – a new reality
For retailers with large product ranges it is physically impossible to manually merchandise every product and line.
The dynamic nature of websites means a home page, or the shop window, can vary according to who is visiting and where they come from. Furthermore most website visitors do not arrive at the front door – how do you prioritise?
The answer is by automating the process. Or rather by automating a large proportion of the product exposure process. This makes the retailer less dependent on individuals with finite capabilities.
Rather than using disparate data sources and old analytics, the machine works on live data and adjusts the site in real time. Automated merchandising steers away from static segmentation – rather than putting visitors in labelled boxes it changes itself according to the visitors’ actions.
If you do a search for ‘online merchandiser jobs’, you will find job sites with between 400 and 2700 vacancies in the UK alone. Clearly there is a lot of work not being done, clearly there are too few people available to do so much work and clearly it is time to automate.
But online merchandisers will not need to seek new employment; rather they will be freed up to do the creative stuff, to deal with the merchandising anomalies that even a sophisticated algorithm cannot tackle.
What’s in it for me?
There are five compelling reasons why an owner of a large ecommerce site should consider automating online merchandising:
• To expose more products to more people
• To save time and time is money
• To increase revenue
• More productive staff
• Reduce down selling
With benefits like that, you’d be mad not to!
By Andrew Fowler
UK country manager